IRS reverses FSA-HRA stance on breast pumps

The Internal Revenue Service has done a turnaround on the deductibility of breast pumps as medical expenses.

The IRS issued Announcement 2011-14 on Thursday, advising the public that expenses for breast pumps and other supplies that assist lactation may be deducted as medical expenses or reimbursed under a flexible spending arrangement or similar plan.

The agency came in for considerable criticism last fall when it decided that breast pumps and other breast-feeding supplies could not be paid for with money from mothers’ tax-exempt flexible spending accounts and health reimbursement accounts.

The American Academy of Pediatrics had requested that breast-feeding costs be reclassified as medical care expenses that would qualify for reimbursement with the accounts, and media coverage of the IRS’s decision provoked outrage among women’s groups.

The Patient Protection and Affordable Care Act places strict limits on the types of pharmaceuticals and medical expenses that could be paid for with health reimbursement accounts and flexible spending accounts.

According to the IRS announcement, the agency concluded that breast pumps and supplies that assist lactation are medical care under Section 213(d) of the Tax Code because, like obstetric care, they are for the purpose of affecting a structure or function of the body of the lactating woman.

Therefore, if the remaining requirements of Section 213(a) are met (for example, the taxpayer’s total medical expenses exceed 7.5% of adjusted gross income), expenses paid for breast pumps and supplies that assist lactation are considered to be deductible medical expenses.

Amounts reimbursed for these expenses under flexible spending arrangements, Archer medical savings accounts, health reimbursement arrangements, or health savings accounts are not considered to be income to the taxpayer, according to the IRS.

The IRS plans to revise Publication 502, Medical and Dental Expenses, to include this information.

The American Academy of Pediatrics is enthusiastic about the IRS decision. "It's fabulous," says Dr. Richard J. Schanler, who chairs the academy’s pediatrics section on breastfeeding.

"I take care of premature babies in neonatal intensive care units, and the mothers have to pump with an electric breast pump to maintain their milk supply, sometimes for several months, because their babies are too small to suckle at the breasts, so this is a tremendous help for them," he says. "Also, it’s an even bigger help, in terms of numbers, for mothers who are trying to return to work who need to maintain their milk supply."

Cohn writes for Accounting Today, a SourceMedia publication.Follow EBN on: Twitter | Facebook | LinkedIn | Podcasts